Judgment:
L. Narasimha Reddy, J.
1. M/s Burmah-Shell Oil Storage and Distribution Company India Limited, has taken on lease, an extent of 300 sq. yards of land in Sy. No. 145/2 of Piler Town from Sri C. Ramaswamy Reddy, on 06-10-1964, for a period of 30 years, and established a petroleum outlet in the land. That company was nationalized through an Act of Parliament i.e. Burmah-Shell (Acquisition of Undertakings in India) Act, 1976 (for short 'the Act'). M/s Bharat Petroleum Corporation Limited, the 1st respondent herein, became its successor. Ramaswamy Reddy gifted the land in favour of his grand-daughter, C. Nirupama.
2. Section 5 of the Act provides for renewal of the lease, in case the Central Government or the Government Company desires for such renewal. The 1st respondent, through its Territory Manager, the 2nd respondent herein (for short 'the respondent') addressed letter dated 14-06-1993 to Ramaswamy Reddy, requesting him to know, as to when it will be convenient for him to register the lease, for a further period, in terms, similar to those, contained in the lease deed, dated 06-10-1964. Ramaswamy Reddy sent a reply dated 30-06-1993, stating that he gifted the property to his grand-daughter, C. Nirupama. It was also mentioned that Nirupama executed a power of attorney in favour of her husband, by name, C. Venkat Mahesh Reddy, and he requested the respondent to correspond with the said Mahesh Reddy, duly furnishing its address. The respondent, in turn, addressed letter dated 27-07-1993, to Ramasamy Reddy with a request to furnish the copies of the gift deed, executed in favour of Nirupama, and power of attorney, executed in favour of Mahesh Reddy. The respondent paid rent for the quarter from October to December, 1993, being Rs. 270/-, to Nirupama. The demand draft was returned through the letter addressed by her Advocate, stating that she is not willing to renew the lease, and that O.S. No. 211 of 1993 (re- numbered as O.S. No. 331 of 1996) is pending, in respect of the property. The respondent sent the reply dated 10-12-1993 through their Advocate by stating that, in view of the unwillingness expressed by Nirupama, they would withhold the rent in future, and it will be paid as and when she demands it.
3. The respondent filed O.S. No. 331 of 1996 in the Court of Senior Civil Judge, Piler, against Nirupama, for a decree, in the form of direction, to renew the lease for a further period of 30 years in same terms and conditions, as contained in the lease, dated 06-10-1964. Initially, ex parte temporary injunction was granted, in the form of interim relief, on 26-10-1993, and thereafter it was vacated on 02-05-1998. At that stage, Nirupama sold the property in favour of Smt. O. Shivalingamma, through sale deed dated 10-05-1999. Sivalingamma, in turn, gifted the property in favour of the petitioner on 09-07-1999.
4. The petitioner addressed a letter dated 19-11-1999 to the respondent, informing that she became the owner of the site; the suit may be withdrawn, and that the rents be paid to her. O.S. No. 331 of 1996 was dismissed on 21-08-2000 on merits. The petitioner states that despite her request, the respondent has not vacated the site. It is also her case that she purchased a further extent of 5,200 sq. yards of land in that very survey number on 10-05-1999, and that she needs the site, on which, petroleum outlet is existing; for her own purpose. This writ petition is filed with a prayer to declare that the respondent has no power to exercise option of renewal of lease, beyond 01-11-1993, and consequently direct the respondent to handover the vacant possession of the premises. The arrears of rent from 10-05-1999 are also claimed.
5. The respondent filed a counter-affidavit, admitting the factum of taking the property on lease, and the correspondence that ensued in relation thereto. It is stated that the option, as provided for under Section 5(2) of the Act, was exercised and by operation of that provision, the lease stands automatically renewed, and that they are entitled to remain in possession, on the strength of such renewal. It is also stated that the petitioner is bound by the terms of extended lease. Objection is raised, as to the maintainability of the writ petition.
6. The writ petition was earlier allowed by a learned single Judge, through order dated 20-08-2005. Writ Appeal 1766 of 2005 was filed by the respondent was also allowed, by the Division Bench of this Court, on 03-04-2006, and the matter was remanded for fresh consideration and disposal, mainly on the ground that the purport of Sections 5 and 7 of the Act was not dealt with, in detail, by the learned single Judge.
7. Sri G. Vidyasagar, learned Counsel for the petitioner, submits that actual desire in terms of Section 5(2) of the Act, for renewal of the lease, was not expressed by the respondent and only a request was made for discussion in that regard. He contends that the lack of bona fides on the part of the respondent is evident from the fact that the request made to the erstwhile lessee was only to discuss about the renewal of the lease for another 30 years, on the same terms i.e., rent @ Rs. 90/- per month. He submits that whatever may have been the purport of the letter dated 14-06-1993, or the correspondence with the erstwhile lessee, the issue has assumed finality with the dismissal of the suit O.S. No. 331 of 1996, and the respondent ceased to have any right to insist on renewal, much less, to continue in the possession of the property. He places reliance upon the judgments of the Hon'ble Supreme Court in Hindustan Petroleum Corporation Limited v. Dollydas : (1999)4SCC450 and Bharat Petroleum Corporation Limited v. Maddula Ratnavalli : (2007)6SCC81 .
8. Sri O. Manohar Reddy, learned Counsel for the respondent, on the other hand, submits that a clear desire for renewal of the lease was expressed through letter dated 14-06-1993, and by operation of Section 5(2), read with Section 7 of the Act, the lease stood renewed for a further period of 30 years. He contends that the dismissal of the suit does not have any effect upon the statutory right, that is conferred upon the respondent. He also raises an objection, as to the maintainability of the writ petition, and submits that the petitioner has to file a suit for the relief claimed in the writ petition. He places reliance upon the judgment of the Supreme Court in Bharat Petroleum Corporation Limited v. P. Kesavan : AIR2004SC2206 .
10. Before discussing the matter on merits, the objection raised, as to the maintainability of the writ petition; needs to be dealt with. For all practical purposes, the petitioner wants the relief of eviction of the respondent from the site and recovery of rents. Strictly speaking, such a relief can be claimed only in a suit, filed in a Civil Court. However, the lease, in question, is in favour of the Government Company, governed by specific provisions of the Act. In identical circumstances, the Hon'ble Supreme Court in Dollydas' case (1 supra), held that a writ petition, under Article 226 of the Constitution of India; is maintainable. Therefore, the objection raised, as to the maintainability of the writ petition, is overruled.
11. The respondent is successor of the original tenant i.e. Burmah-Shell Oil Storage and Distribution Company of Indian Limited. The Parliament enacted the Act, nationalizing M/s Burmah Shell Company, and providing for matters, in relation thereto. Section 5 of the Act provides for vesting in the Central Government, of the leases or tenancies, that exist forever in the nationalized company, as on the notified date, and for renewal of the same, on a desire being expressed by it. Section 7 provides for vesting of the rights of the nationalised company, in a Government Company, i.e. the respondent, and the conditions therefor. Sections 5 and 7 read as under:
Section 5: Central Government to be lessee or tenant under certain circumstances.-
(1) Where any property is held in India by Burmah Shell under any lease or under any right of tenancy, the Central Government shall, on and from the appointed day, be deemed to have become the lessee or tenant, as the case may be, in respect of such property as if the lease or tenancy in relation to such property had been granted to the Central Government, and thereupon all the rights under such lease or tenancy shall be deemed to have been transferred to, and vested in, the Central Government.
(2) On the expiry of the term of any lease or tenancy referred to in Sub-section (1), such lease or tenancy shall, if so desired by the Central Government, be renewed on the same terms and conditions on which the lease or tenancy was held by Burmah Shell immediately before the appointed day.
Section 7: Power of Central Government to direct vesting of the undertakings of the Burmah Shell in a Government company.-
(1) Notwithstanding anything contained in Sections 3, 4 and 5, the Central Government may, if it is satisfied that a Government company is willing to comply, or has complied, with such terms and conditions as that Government may think fit to impose, direct by notification, that the right, title and interest and the liabilities of Burmah Shell in relation to any of its undertakings in India shall, instead of continuing to vest in the Central Government, vest in the Government company either on the date of the notification or on such earlier or later date (not being a date earlier than the appointed day) as may be specified in the notification.
(2) Where the right, title and interest and the liabilities of Burmah Shell in relation to its undertakings in India vest in a Government company under Sub-section (1) the Government company shall, on and from the date of such vesting, be deemed to have become the owner, tenant or lessee, as the case may be, in relation to such undertakings, and all the rights and liabilities of the Central Government in relation to such undertakings shall, on and from the date of such vesting, be deemed to have become the rights and liabilities, respectively, of the Government company.
12. It is a matter of record that there existed a lease in favour of the Burmah Shell from Sri Ramaswamy Reddy, ever since 1964. The respondent stepped into the shoes of Burmah Shell Company, and they were entitled to avail their right, under Section 5(2) read with Section 7 of the Act. The advise tendered, and request made, by the respondent, in their letter dated 14-06-1993, to the lessor, was as under:
This is to advise you that in terms of Section 5 and Section 7(3) of the Burmah-shell (Acquisition of Undertakings in India) Act, 1976, extract of which is enclosed for your reference, we desire to renew the lease for a further period of 30 years commencing from on the same terms and conditions on which the lease abovenamed viz. Burmah-Shell Oil Storage & Distributing Co. of India Ltd., held the lease immediately before the appointed day viz. 24th January 1976. May we therefore request you to let us know when it will be convenient for you to have the lease registered on terms similar to those existing in the current lease. On receipt of your advice in this matter, we shall take further action.
13. From this, it becomes clear that neither any desire was expressed, much less the terms for renewal were discussed. It was almost in the form of a command, and straightaway, a request was made to execute a registered lease deed, in the same terms, similar to those, in the current lease. In other words, the respondent wanted a lease deed be executed for a period of 30 years, on a rent of Rs. 90/- per month, not to speak of other conditions. The lessee, in turn, replied, stating that he ceased to be the owner of the property. He has also furnished the particulars of transferees. Even assuming that the letter dated 14-06-1993 constituted expression of any desire, to renew the lease, it ceases to be of any legal effect. The respondent was supposed to make their efforts, to express the desire, with the transferee.
14. The only correspondence or transaction, which the respondent undertook with the transferee of original lessee was, to send a demand draft for Rs. 270/-, being the rent for the quarter, from October to December 1993. The demand draft was returned with an observation, that 'the lease expired', and that 'she has no intention to renew the lease'. The reply given by the respondent to such a letter was, as follows:
While returning the DD sent towards rent for the quarter October to December 1993, your client has indirectly expressed her unwillingness to accept the rentals even if tendered in future. In view of this, we are withholding the rental payments effective 1.1.1994 and hasten to advise your client that the rentals accumulated thereon will be paid to your client as and when demanded by her.
15. Except this, no other correspondence ensued, much less any desire, to extend the lease, was expressed. On the other hand, a suit being O.S. No. 331 of 1996 was filed for the relief of direction to the defendants therein i.e. Nirupama, etc., to renew the lease for further period of 30 years. The suit was dismissed, and no appeal was preferred against it. Therefore, it emerges that the effort made by the respondent, to seek renewal through intervention of the Civil Court; did not fructify. Once the suit, for a specific relief of direction to renew the lease was dismissed, the respondent cannot fall back the option under Section 5(2) of the Act, and claim that, they have a right to insist on renewal. Such a course would amount to place the respondent on a higher pedestal, than the civil court, and enabling it to just ignore the result of a suit, filed by themselves. Even a sovereign Government cannot ignore a judgment, rendered by a Court of Law. The act of the respondent, in feeling itself free, to ignore the outcome of a suit, that too, filed by itself; does not befit the conduct, expected of a statutory Corporation, much less of the State, within the meaning of Article 12 of the Constitution of India.
16. In Ratnavalli's case (2 supra), the Supreme Court took the view, that a State, under Article 12 of the Constitution of India, is required to be reasonable, fair, bona fide, and not arbitrary, even while acting as a tenant or landlord. The facts of that case are similar to the one, on hand. Sections 5 and 7 of the Act were interpreted. The judgment in Kesavan's case (3 supra), relied upon by the respondent, was discussed in Ratnavalli's case (2 supra). The plea, that renewal provided for under Section 5(2) of the Act was automatic; was repelled. The purport of the correspondence undertaken in that case is, almost identical to the one, in the present case. The expression 'if so desired by the Central Government' was interpreted by the Hon'ble Surpeme Court, in the following terms:
Para-13: The appellant company is a 'State' within the meaning of Article 12 of the Constitution of India. It is, therefore, enjoined with a duty to act fairly and reasonably. Just because it has been conferred with a statutory power, the same by itself would not mean that exercise there of in any manner whatsoever will meet the requirements of law. The statute uses the words 'if so desired by the Central Government'. Such a desire cannot be based upon a subjective satisfaction. It must be based on objective criteria. Indisputably, the 1976 Act is a special statute. It overrides the provisions of Section 107 of the Transfer of Property Act. The action of the State, however, must be judged on the touchstone of reasonableness.
17. The concurrent findings recorded in that case by the Subordinate Court and High Court, that the desire expressed by the appellant was not bona fide; were upheld by the Hon'ble Supreme Court. The present case stands on a higher footing. The reason is that no desire as such was expressed by the respondent to the transferee of the property, who was the owner, as on the date of the earlier lease.
18. Assuming that the letter dated 27-07-1993 is referable to Section 5 of the Act, it needs to be noted that a 'desire', in matters of this nature, can be said to be genuine, legal and valid, if only the proposal was unequivocal, and the terms are reasonable, on the touchstone of a transaction between a willing lessor and willing lessee. To be precise, a 'desire', on the part of the respondent, could have been treated as valid and legal, in case a proposal was mooted for renewal of the lease, after the terms were negotiated on important aspects like rent, or by offering discussion thereon. The property was enjoyed for a period of 30 years on payment of rent at Rs. 90/- per month. Obviously, reeling under the impression that Section 5(2) of the Act enables him to do so, the respondent insisted the lease be extended by another 30 years, on the same terms. Not even an attempt was made, to discuss the matter, or to negotiate the terms. It must not be forgotten that even where a property is compulsorily acquired, the owner thereof is given opportunity at various levels, be it, as regards his willingness, to part with it, or the adequacy of compensation. Law also provides for solatium for the compulsory acquisition. The respondent felt that the lessor or his transferee is a non-entity; and at their will, they can squat on the property, even while earning profits of hundreds and thousands of crores of rupees, in their business. Hardly any act of sovereignty is involved in the activities of the respondent. Their activity is pure and simple, commercial in nature. Still, they have arrogated to themselves, the power, which even a sovereign State could not have claimed.
19. For the foregoing reasons, the writ petition is allowed. Three months time is granted to the respondent to vacate the premises, and pay the arrears of rent from May 1999 @ Rs. 90/- per month.
20. In default, the respondent shall be liable to pay the rent @ Rs. 3,000/- (three thousand) per month, in future, apart from the legal consequences, that flow out of it.
21. There shall be no order as to costs.